The Federation of Wholesale Distributors has called on the drinks trade to work with HM Revenue & Customs to stamp out alcohol duty fraud.

The body was responding to a report by the National Audit Office which said HMRC had made “no tangible progress” in tackling diversion fraud.

The FWD has worked closely with the NAO during the two years it was preparing the report, which said that the volume of alcohol available for fraudulent use in the UK “is to a large extent within the control of producers and large buyers of duty-suspended goods”.

Chief executive James Bielby said: “We welcome NAO’s analysis of the strategy and share its assessment of the lack of success in preventing diversion fraud.

“The illegal sale of alcohol is the responsibility of the entire supply chain and we would like to see all stakeholders helping HMRC by providing data on the movement and export of beers, wines and spirits in order to accurately assess the extent of the problem and where and how it occurs.

“The FWD appreciates HMRC’s efforts in recent months to consult industry on potential anti-fraud measures, including fiscal marks for beer. We will continue to engage constructively with the department as it develops its proposals.” 

The Wine & Spirit Trade Association warned that duty hikes can encourage potential fraudsters to take action.

Communications director Gavin Partington said: “There’s little doubt there has been an increase in fraud as the evidence from the WSTA fraud prevention unit testifies. Since it launched in May last year, fraud costing over half a million pounds has been reported to the unit and we’re working with the authorities to help tackle the problem.

“Sadly, the substantial tax increases on alcohol in recent years have provided an additional financial incentive for people to seek to make money out of illegally produced alcohol.”